STI Update

STI hit a high of 2827 on Thursday but succumbed to selling pressure to close at 2802 on Friday.

Going towards the end of 2009, the index looks to be consolidating at current levels. The technical picture shows the MACD indicator below its signal line which is a bearish signal. The ADX has fallen to around 17 which correspond to the weakening of the uptrend. Short term stochastic is also giving a bearish signal and points to short term weakness.

Support is at 2770 and 2740 respectively. The break above the strong resistance at the 2700 to 2730 range is still valid. This indicates a target of 2900 which looks attainable.

STI is safe for now

Dubai’s announcement to restructure its biggest corporate debtor, Dubai World, and delay payment on some of the company’s US$59 billion of liabilities caused tremors across global stock market.

Singapore market was closed for holiday on Friday and did not bear the brunt of the global selling. Its impact will be felt on Monday on market open for business.


The technical charts are still showing a positive picture.





There is a high chance that the MACD indicator will move below its signal line in the coming week which will change the technical picture.


A look at the KST weekly indicator for STI showed a bearish crossover on 12 Oct 09.

If the index moves below 2600 then it will be very bearish. The last time the KST weekly indicator made a bearish crossover was on 28 July 2008. And the index dropped from a high of 2912 to 1473 before it made a bullish crossover again. Let’s see if the market is able to fend off a bear attack.

Market Correction Or Trend Reversal?

Dow Jones Industrial Average closed at 9712 on Friday down 249 points. The moved erased all the gains made on Thursday. The index closed below the uptrend channel and is at dangerous territory. The RSI is now at 45 level. Note that RSI has not fall below 40 level since Jul 09. MACD is showing bearish signal as well with the indicator below its signal line. -DI is set to cross the +DI, this may mark the beginning of the correction that the market has been expecting for some time now.

The next few trading days will be crucial. If the index is able to close within the
uptrend channel, it will be good for the bulls. If the index is not able to gather enough
momentum, then the correction looks set to test the low of 9378 set on 2 Oct 09.

SC Global

SC Global has come a long way since hitting a low of $0.295 on Mar 09. Prices tested $1.42 on 5 Oct 09 before rebounding to close at $1.63 on Friday 9 Oct 09.

SC Global is in the luxurious property sector. Sale of Seven Palms Sentosa Cove got underway and it managed to sell 6 out of 10 released units in a recent private preview. Transacted price range from $3,100-$3,400 psf with each unit costing $11m.

The technical charts are also showing improvements following the test of $1.42 on 5 Oct. Prices is on the rise and is set to test $1.77 level. MACD indicator is about to make a bullish crossover. However volume for the recent rebound has been on low volume which shows that market players are still not coming back in full force.

Last Friday, this counter makes a Doji pattern. If the price can break the $1.77 level on high volume, we could see $2.00 soon.

Singapore Market

STI index has stayed within a 200 points range since it broke the 2424 resistance level in mid July 09. The bulls pushed the index to 2700 on 4 Aug 09 but could not overcome the sellers that came in to take profit.

The market correction that analysts talked about has materialized. Investors have been buying on dips and that strategy seems to be working since March 09.

The technical charts are showing warning signs. –DI has just made a crossover with the +DI. MACD histogram has been fluctuating about the zero line which shows a directionless market. However the MACD indicator has recently pulled away from the signal line meaning that selling is gathering pace.

With Dow closing down 42 points on Friday, there will be some selling pressure early next week. Another thing to note is the strength in Japanese yen. USDJPY currency pair traded at a low of 89.50 before recovering slightly to close at 89.84. This will exert some pressure on the Japanese equity market next week as well as strength in yen is bad news for Japanese exporters.

The support level to watch is 2560, 2521 and 2424.

Shanghai Market

Shanghai market tested the uptrend line this week. The good news is the uptrend line is still intact with the support level holding on to attacks from the bears.

However there are a few warning signs appearing on its weekly chart.

Firstly, the MACD indicator has cut down from its signal line. The indicator has stayed above its signal line since end of Nov 08.

Secondly, the +DI is about to go below the -DI line. This indicates that the uptrend may be slowing down.

The critical level to watch is the uptrend line. The index needs to stay above the uptrend line. If it closes below uptrend line, a sell down may be in the cards.

Dow Potential RSI Divergence

Dow closed at 9544 on Friday, down 36 points for the session. For the week, the index rose 39 points.

The technical picture is mixed at this point.

The ADX and DIs indicators are indicating a continuing up trend.

RSI is showing a divergence pattern with the Dow making a high this week but with no confirmation from the RSI indictor. This is bearish and suggests a possible sell down.

The MACD indicator is not able to make a decisive crossover with its signal line and it shows that the bull’s strength is waning.

The moving average is showing a bullish picture with the Dow above its 14, 25 and 50 day moving average.

At this point, the bulls and bears are equally matched and there is no clear evidence of where the market is going. However I will lean more towards the bear's camp.